CIA calls for joined-up air quality and decarbonisation policy, warning that tighter NMVOC limits could increase energy use, carbon emissions and costs. It advocates risk-based regulation, funding for cleaner abatement technologies, and adjustments to UK ETS allowances, CCA baselines and ESOS reporting to avoid penalising sites for complying with regulation.
Industrial emissions of volatile organic compounds
Non-methane volatile organic compounds (NMVOCs) are a broad group of carbon-containing chemicals that readily evaporate into air.[1] They are important air pollutants because they contribute to the formation of ground-level ozone and photochemical smog, which can damage vegetation, reduce agricultural yields and cause respiratory problems. Some are also harmful to human health. NMVOCs can be emitted from both industrial processes and everyday activities.
Industrial NMVOC emissions can arise from the production of organic chemicals, plastics and resins, as well as the storage and handling of chemicals. However, the UK chemical sector has been highly regulated since the 1990s and is not a major emitter of NMVOCs (or other air pollutants) in the UK. The total emissions from the chemical sector represents only 1% of the UK total across the five main National Emissions Ceilings (ammonia, nitrogen oxides, sulphur oxides, NMVOCs, and particulate matter).
Technologies such as activated carbon adsorption, thermal oxidation, catalytic oxidation and membrane separation can be used to capture or destroy NMVOCs in waste gas streams. But their application depends on the concentration and composition of the waste gas, the volume of gas being treated, the value of the chemicals being recovered, and the required overall emissions performance. This latter is important, because deploying these technologies increases a site’s energy demand and carbon dioxide footprint, with implications for compliance with other UK energy and climate policies.
Regulation of NMVOCs through ‘Best Available Techniques’
UK emissions of NMVOC have decreased 73% between 1990 and 2024, including large reductions in emissions from industrial processes. To continue this trend, the Government has proposed tighter emission limits on NMVOCs for chemical sites, under the UK Waste Gas for Chemicals (WGC) Best Available Techniques (BAT). The tighter limits impact 75% of all UK chemical facilities (approximately 300 manufacturing sites) and compliance is required within four years of the publication of the BAT conclusions, i.e. by late 2030.
The challenge for industry is that these tighter limits encourage the installation of NMVOC treatment technologies that require additional energy to run, with implications for industrial energy and carbon dioxide emission targets. For example, thermal oxidisers require continuous high temperature heat, typically sourced from natural gas, resulting in a significant carbon dioxide emission uplift. Other technologies require additional energy to heat or cool waste gases, and to operate fans, pumps and compressors.
The capital cost to CIA members alone is estimated to run into hundreds of millions of pounds (significantly more than the Government’s impact assessment suggests) without any significant benefit for the environment. Further, the blanket installation of NMVOC technologies across sites will drive up industrial energy use and resultant carbon dioxide emissions, with a clear impact to the environment and at significant cost to business.
The cost to business does not just materialise in the energy bill. It also emerges from three of the UK’s key industrial decarbonisation policies, the UK Emissions Trading Scheme, the Climate Change Agreements Scheme and the Energy Savings Opportunity Scheme.
CIA recommendation 1
CIA is asking the Government to avoid a blanket implementation of the WGC across the chemical sector and instead adopt a targeted, risk-based approach, focused on new facilities and existing sites with the highest emissions. A risk-based approach would better support the Government’s overall policy aims, including reindustrialisation and decarbonisation. Failing that, we ask the Government for regulator flexibility, beyond a derogation process, so that consistent and pragmatic decisions can be taken where little or no benefit to the environment is foreseen.
CIA recommendation 2
Some of the funding available under Government-supported research bodies – like Innovate UK, the Foundation Industries Sustainability Consortium (FISC), the Industrial Decarbonisation Research and Innovation Centre (IDRIC) and Great British Chemicals – should be directed towards the innovation, development and demonstration of technologies that can capture or destroy NMVOCs using the least energy and resulting in the fewest emissions of any kind.
Implications for the UK Emissions Trading Scheme
The UK Emissions Trading Scheme (UK ETS) is one of the UK’s flagship decarbonisation policy instruments. The UK ETS imposes a direct cost on manufacturers, by putting a price on emissions of carbon dioxide from on-site combustion. In this way, it is hoped to encourage sites to move away from the use of fossil fuels, towards low carbon fuels.
A requirement to install NMVOC treatment technologies would negatively impact a site’s performance within the UK ETS. In particular, where NMVOC abatement technologies like thermal oxidisers are needed a site can expect a significant increase to its scope 1 carbon dioxide footprint. This would come with a corresponding increase to that site’s liability to buy UK emission allowance permits, at a current price of around £65/tCO2e.
Impact mitigation 1
The Government should recognise the affect of air quality regulation on the performance of participants in the UK ETS and move to mitigate the impact. This could be done by making additional free allowances available to sites that must comply with the WGC, where it can be shown that their carbon dioxide footprint has increased as a result of compliance. This increase to free allocation should be taken from a reserve pot and should not trigger a cross-sector correction factor.
Implications for the Climate Change Agreements scheme
The UK’s Climate Change Agreement (CCA) scheme is designed to support energy-intensive industries by providing relief on an energy tax - the Climate Change Levy (CCL) - in exchange for meeting energy efficiency performance targets. The CCL is applied to both natural gas and electricity and the CCA provides a vital discount on both utilities.
The scheme’s focus on energy efficiency means that participant sites introducing new energy demand, related to the treatment of NMVOCs, will face a detrimental impact to their performance. If a site fails its energy efficiency performance target, as a result of installing NMVOC abatement technology, then it will face a penalty buy-out fee of £37/tCO2e applied to the target shortfall.[2]
Impact mitigation 2
A similar issue arises in the CCA scheme when it comes to decarbonisation investment. If a CCA participant were to invest in electrification, hydrogen or CCUS, in each case its energy use would increase and it risks failing its energy efficiency targets. For industrial decarbonisation technologies, CIA has asked the Government to explore using the novem accounting methodology, already established in the scheme, to introduce the new production process as if it were a new product line, enabling the site to transition to a new baseline. CIA also supports this approach for NMVOC treatment technology and other similar technologies that may be regulated for, at a later date.
Implications for the Energy Savings Opportunity Scheme (ESOS)
The energy savings opportunity scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria. Organisations that qualify must carry out an assessment every four years, including an audit of the energy used by their buildings, industrial processes and transport. ESOS is intended to identify tailored and cost-effective measures that allow businesses to save energy, carbon and cost.
From Phase 4 of ESOS, qualifying companies will need to publicly disclose their total energy use and energy intensity, e.g. kWh per tonne of product output. At these businesses, the installation of NMVOC abatement technologies will register as an increase in energy use and a reduction in energy efficiency. The company would be seen to be becoming less energy efficient, owing to compliance with air quality legislation rather than poor operational management. This in turn could lead to reputational risk, customer or supply chain pressure, and investor concern.
Impact mitigation 3
Where a business has installed NMVOC abatement technology, in order to comply with regulation, the Government should add a clarifying note to the published energy consumption and energy intensity report. This would allow external stakeholders to understand the reason for the associated increase in energy use and reduction in energy efficiency, avoiding risks associated with reputation that could otherwise have a financial impact.
Summary of recommendations
CIA is calling on the Government to avoid a blanket implementation of the WGC across the chemical sector and instead adopt a targeted, risk-based approach, focused on new facilities and existing sites with the highest emissions. Failing that, we ask the Government for regulator flexibility beyond a derogation process, so that consistent and pragmatic decisions can be taken.
The Government should also consider directing public funding for industrial innovation towards innovation, development and demonstration of technologies that can capture or destroy NMVOCs, using the least energy and resulting in the fewest emissions of any kind.
In situations where NMVOC abatement technologies must be implemented, we recommend the following to mitigate the impact to site performance within other industrial energy and decarbonisation schemes:
1) In the UK ETS, make additional free allowances available to sites that must comply with the WGC, where it can be shown that their carbon dioxide footprint has increased as a result of compliance.
2) In the CCA scheme, use the novem accounting methodology to introduce NVMOC abatement equipment as if it were a new product line, enabling the site to transition to a new energy efficiency baseline.
3) In ESOS, add a clarifying note to published energy consumption and intensity reports, to identify where a company has installed NMVOC abatement technology to comply with regulation.
Together, these recommendations would go some way to reducing the administrative and regulatory cost burden to UK manufacturers, without compromising, and potentially even reducing, the overall impact to the environment.
[1] Methane is treated separately for emissions reporting and air-quality regulation because, whilst it is a volatile organic compound, it is also a potent greenhouse gas in its own right and therefore reported separately in greenhouse gas inventories.
[2] The target shortfall is calculated in units of energy and converted to units of tCO2e.
